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Given the cash flows for two projects, M and N. Project M requires an initial investment of $50,000, and Project N requires an initial investment

Given the cash flows for two projects, M and N. Project M requires an initial investment of $50,000, and Project N requires an initial investment of $45,000.

Year

Project M

Project N

1

$12,000

$10,000

2

$14,000

$11,000

3

$16,000

$12,000

4

$18,000

$13,000

5

$20,000

$14,000

(a) Calculate the NPV for each project using a discount rate of 7%.

(b) State your accept/reject decision.

(c) What would be your accept/reject decision if they were independent projects?

(d) Calculate the IRR for each project.

(e) Which project would you recommend if only one can be selected?

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